Higher or Lower?

🔹 Donny

• IREN
  🗓 Called: May 19 Weekly Close
  🔍 Catalyst: 50 EH/s installed capacity announcement
  📈 This Week: +30%
  💰 Total Gain: +80% in 6 weeks

• HIMS
  🗓 Called: June 23 Weekly Close
  🔍 Catalyst: Market overreaction to Novo Nordisk partnership news
  📈 This Week: +13%
  💰 Play: Bought the dip, quick rebound win

🔹 Abe – Options Plays

If This, Then That

We've spent the past few editions covering more philosophical ideas and generalized money-making strategies, but in today's session, we'll return to the foundations of trading.

We'll be discussing the core approach to trading that traders use, regardless of their underlying strategy. As per the title, I'm talking, of course, about "If this, then that" setups. 

You see, as a trader, our job is not to nail every market move, or even to predict the future (though it's fun when we do). No, our job as a trader is first to manage risk, and secondly to PLAN. 

Whenever I open up my chart, I will immediately have an instinctual reaction that tells me what is most likely to happen next. After many years on the charts, you develop a sixth sense for it. However, in 90% of cases, we do not act on this initial instinct.

That is because the majority of charts are "Diddling in the middle", while they might have a likely direction, they are not in a place where we can secure a strong trade. If you've been on any of The Edge livestreams, you know we talk about trading 'from a position of power.' Well, “diddling” in the middle is the opposite.

Okay, so if it's “diddling” in the middle, we do nothing, cool. Now what? 

Now we plan.

If we structure ideas in the form of 'If this, then that,' we can usually find a whole heap of variations that the charts can form. Rather than blindly waiting for a chart where our instinct aligns with a position of power, we plan for them beforehand. I know that if X and Y form on my chart, then Z is likely to follow.

For example: 

If Bitcoin double tops with a liquidity sweep at the highs and does so at resistance, then it will likely decline to the next major support level.

If the setup is already on the chart, great! But 9 times out of 10, it's not printed yet. However, if it'll come, the signs are often there! So before it's ever on my chart, I'm already looking to 2, 3, maybe even 5 different outcomes, picking the most likely ones and figuring out how to structure trades around them.

Whenever you look at a chart, don't just focus on the last few candles; try to imagine what's possible over the next 10 to 20 candles. That way, you are prepared when the time comes to execute. 

And as a side benefit: by defining your setups before the chart is there, it's easier to execute on them. It's much harder to buy when prices are dumping like crazy, but if you planned for this and it's unfolding as you expected, all of a sudden it's way easier.

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